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-------------------------------------------------- From: "Tom DeReggi" <[email protected]> Sent: Friday, May 28, 2010 8:15 AM To: "WISPA General List" <[email protected]> Subject: Re: [WISPA] How the FCC Proposes the Regulate Broadband > I've always been pro-tax credit, based on my personal agenda. > I think it incourages investment, not only helps reduce an ISP's tax > burden. > > However, from my experience debating ARRA, I learned there can be some > disadvantages of Tax Credits. > The BIG disadvantage for WISPs is that it helps Large Telcos and Cable Cos > and large scale VC backed companies the most. They have tons of income > they'd love to have tax relief from. Did you read what my proposal was? Because as it is, I cannot possibly see how this scenario could possibly be true. Please, keep reading. They also have tons of money to > invest, WISPs may have less comparatively. Probaly the best way to get > FIOS > built out to your community, to put the local WISP out of business, is to > give Verizon a healthy Tax credit to Invest there. As is defined by "my community", and as defined as I defined things in my proposal, I reach 9 different "communities". What I cover would be in 9 different segments, 6 of which would contain under 3000 people. Verizon is NOT going to build out 50 miles of fiber to reach 95% of the roughly 2500 people (1000 rooftops) in my hometown (my zip code), just so they could get a tax credit of 5, 10, or even 20 or 50 dollars/month / customer in my area, especially if that lasts for 3 or 4 years, max. Because no matter what they offered, I could come right behind them and simply offer VASTLY less expensive service and get a LOT better ROI. Verizon would be insane to even try. If the credit was $50/month, I'd simply declare "free internet for a limited time" and for a $150 install fee, they'd get "free" internet for as long as that subsidy lasted. And then $40 after that. Verizon can't compete with that. Their needed 30 years of revenue to amortize would not exist. The next question is: Where would they build out fiber, where no competition exists, with 'near universal coverage', where a single zip could would net them huge numbers of customers? Nowhere. Such scenarios don't exist anymore outside of smalltown/rural/unusual areas. And, if that kind of per-person refund did exist, the chance that no competitor would come along to capitalize on it and bring the subsidy to an automatically triggered end is real small. > > The bottom line is large companies have cash and favorable borrowing > capabilty and have no problem looking at 30 years out to gain their ROI. That's all fine and good, but we're not talking about subsidy for 30 years. More like 2 to 5 or maybe 8, tops. > WISPs on the other hand tend to be more upfront cash constrainted. Even > lending can be limted due to insufficient colladeral. Now I understand > many > business owners are better off than others in their ablty to get larger > scale funding. But as projects scale larger, it becomes more of a > challenge. > The Large Telcos (and USF ILECs) always will have more recognized > colladeral. Yes, and they are technologically constrained. And, beaurocratically hampered from being anywhere near the efficient models of a small business. > This is one of the reasons that in ARRA lobbying that the concept of Loan > assistance and Grants was preferable to lobby for. That would be more > beneficial to a WISP than a tax credit on income they never had, because > they never were able to fund their proposed project in the first place. But they have the manpower, lawyers, accountants, and lobbyists to kick us to the curb in terms of getting those. besides, WHY WOULD I WANT MORE DEBT??? If someone came to me and said "You qualify for 200,000 line of credit, at terms that seemed fantastic... I would NOT take it. Once burned, twice shy. I'm going to own this business, not rent it from the lender. I've finally reached the point where I got enough money coming in to make some growth investment every month, enough to be meaningful to my business. And I do. Every month it's upgrades to stuff, new sites, more capacity, or "little cost" install deals or whatever. I'm leveraging every dime I can and what debts I have have tought me to STAY OUT. Further, the "lending/grants" methods are all about how to play the game, not making the best use of what capital you have. It doesn't fund the best ideas. It funds the best application (fantasy) writer. > > The question to be asked is..... Do we want to ask for tax credits, that > would help WISPs a little bit, at the expense of helping our competitors a > lot? This seems a completely false choice to me. I see it as technologically agnostic, especially when we as WISP's are actually free to use whatever darn technology works for a given situation. I don't see Verizon building out small WISP-like structures in Timbuktu to fill gaps that fiber is too costly to have a good return on. You can't have trained union monkeys run stuff that requires care, judgement, and creativity, and a depth of knowledge, to be successful. The size of the business has to match the appropriate size of the project. And by using appropriately small blocks of "measurement" and assessment, there is no huge loophole for exploiting millions while doing little. Thus you'll find no large interest in the part of any of the really big players, and NONE from the telcos, since they're automatically exempt due to having been a state or federal or other franchise. > If the goal is to help more American get faster broadband sooner, Tax > Credits is a great idea. But if the goal is to help make sure WISPs > becomes > a larger part of that solution, I'm not so sure it helps us. > Strategically, > it would benefit WISPs if we could discourage investment from large > carriers. I was offering a technology agnostic stimulus to the free market. If you don't' think WISP's can compete in that, my apologies. But please don't poo-poo a good idea because you lack faith in you/your industry/your fellow WISP's. Frankly, we can beat them, big time. If you don't agree, tough. I'm perfectly confident we can, because we ARE. > > The other thing is that Tax Credits equally rewards all spending whether > it > is efficent or wasteful spending. Dont we want policy that focuses rewards > to those that spent more efficiently? WISP's advantage is that they have > more affordable cost of deployment. What? What ARE you talking about? How does a temporary per-customer-served-per-month tax credit of 5, 10, 20 or whatever per month incentivize bad judgment when it comes to spending? > > One of the things I challenge today is where there is any place left on > teh > planet in rural America that is not cost effective to serve with wireless? LOL, I can find lots of them. Lots of them are right here inside my overall target market. The fact is, they're "small" and contain 1, 5, 50, 300, or even 500 total rooftops. > With the exception of Tower costs. If line of sight can be acheived, and > twoers are needed, the cost to deploy an area can skyrocket. But > otherwise, > even rural areas of 1 home per square mile can be afforded with Fixed > Wireless. HAving a low dnsity is actually preferred. When a 2.4Ghz AP can > extend 20 miles, and can only support about 20-50 homes per AP, its a > perfect match for low density rural terrain. I do that all the time. I have one AP with customers between 900 feet and 24 miles. And only 13 total. The biggest lack for me, is that lack of private land to plant stuff on. Too much public land, and public land around here is coated with a thick veneer of Unobtainium. > > I also have no patience for thoise that say a small rurla town can survive > without being a monopoly. I live in a farm town with 300 homes, 25 acre > zoning minimum, most have much more land per farm.. And here are 4 WISPs > in > this town, and there is enough revenue for each of us, for each of us to > justify keeping up operations. What it means is that we dont put all our > eggs in one town. Having 25% of the market in 4 towns, is equivellent to > 100% of the market to serve one. I only need 5 customers in a town for it > to > be profitable to serve. (again, there are exceptions to that based on > tower > requirements). But the answer is just to spread out farther, so one towns > infrastructure can subsidize the next's. Sometimes it means diversity, > where a provider might need to offer otehr services like Compueter repir > or > traininf along side their Broadband opperations. But that has often been > the > way it is in small towns, where businesses serve more than one function > for > its community, than its core competency. > What people really mean is that Fiber is more cost effective to deploy as > a > monopoly. I agree with that. Which is why beaurocrats should not be allowed to decide to offer loans or grants to build fiber out at enormous cost. Businessmen and women with entrepreneurial skill and creative thinking should be incentivized to put their OWN money in play and have some short term incentive / extra profitability to recoup that cost, but no gaurantee of anything, except that they must continue to be worthy to survive. > > Isn't what we really need is continued awareness building that Wireless > delivers what people need, and what is needed is investment in Wireless. > Like the Rolling Stones said, "You cant always get what you want, but if > you > try sometimes, you can get what you need". Sure. I've invested 6 years, my life's savings (wasn't a lot, it was 5 years post-bankruptcy when I started this journey), and many many hours of the day and night, freezing in blizzards, scorching in the sun, drowning in torrential rains, and even sitting and down and enjoying fantastic lemon pie from the customer as a thanks for our help. I don't consider this a task for, or even remotely appropriate for politicians, bankers, or agency people. Sorry, real investment is done one hard working schmuck at a time - and it's the only investment with real returns. > > The other thing is that a tax credit will decrease the fed government > revenue earned from larger telcos (our competitirs), which is a huge sum > of > money. Wouldn't it be better if that revenue was kept, and reused for > broadband programs that would help smaller providers and competitive > providers? Killing off USF and giving tax credits in combined would > benefit > wealthy urban/suburban RBOCs and Cable Cos the most. One price advantage > that WISPs have today, is that we dont have to impose that 6% USF tax > today > on our subscribers. Its one of the hidden charges on teh telco bill, that > helps reduce how much RBOCS out price us. How many WISPs advertise, "no > hidden charges"? None of this really makes any sense, Tom. I can't understand how any of it is actually "true". You're going to have to find some concrete, real examples of how it works, because frankly, I can't even dream up a scenario that fits within anything I proposed, nor even that which fits within the conceptual idea of anything I've proposed, that makes any of this any issue of merit. Frankly, reducing the federal government's revenues is a GOOD thing. Confound it, why do people consider "more money to the federal government" some kind of moral imperative? Especially when it takes approximately 3 times more than what even God asks for of our earnings, and wastes it with a raw efficiency equaled only by forced air induction incinerators or wildfires? > > > Tom DeReggi > RapidDSL & Wireless, Inc > IntAirNet- Fixed Wireless Broadband > > -------------------------------------------------------------------------------- WISPA Wants You! 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